Intrinsic value of Manhattan Bridge Capital - LOAN

Previous Close

$6.12

  Intrinsic Value

$15.58

stock screener

  Rating & Target

str. buy

+155%

Previous close

$6.12

 
Intrinsic value

$15.58

 
Up/down potential

+155%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as LOAN.

We calculate the intrinsic value of LOAN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  25.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  5
  8
  12
  18
  27
  38
  52
  70
  92
  118
  149
  185
  226
  273
  324
  381
  444
  511
  584
  661
  743
  830
  921
  1,017
  1,118
  1,223
  1,332
  1,446
  1,565
  1,688
  1,816
Variable operating expenses, $m
 
  2
  2
  4
  5
  8
  10
  14
  18
  24
  30
  37
  45
  55
  65
  76
  89
  102
  117
  132
  149
  166
  184
  203
  224
  245
  266
  289
  313
  338
  363
Fixed operating expenses, $m
 
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
Total operating expenses, $m
  2
  4
  4
  6
  7
  10
  12
  16
  20
  26
  33
  40
  48
  58
  68
  79
  92
  105
  120
  135
  152
  169
  187
  207
  228
  249
  270
  293
  317
  342
  367
Operating income, $m
  3
  4
  8
  13
  19
  28
  39
  53
  71
  92
  117
  145
  178
  215
  257
  302
  352
  406
  464
  526
  591
  661
  734
  810
  891
  975
  1,062
  1,153
  1,248
  1,346
  1,449
EBITDA, $m
  3
  4
  8
  13
  19
  28
  39
  53
  71
  92
  117
  145
  178
  215
  257
  302
  352
  406
  464
  526
  591
  661
  734
  810
  891
  975
  1,062
  1,153
  1,248
  1,346
  1,449
Interest expense (income), $m
  1
  1
  2
  2
  4
  5
  8
  11
  14
  19
  24
  31
  38
  47
  57
  67
  79
  92
  106
  121
  137
  154
  172
  191
  211
  232
  254
  276
  300
  325
  350
Earnings before tax, $m
  3
  3
  6
  10
  15
  23
  32
  43
  56
  73
  92
  115
  140
  169
  200
  235
  273
  314
  358
  405
  454
  506
  562
  619
  680
  743
  808
  877
  948
  1,022
  1,098
Tax expense, $m
  0
  1
  2
  3
  4
  6
  9
  12
  15
  20
  25
  31
  38
  45
  54
  63
  74
  85
  97
  109
  123
  137
  152
  167
  183
  201
  218
  237
  256
  276
  297
Net income, $m
  3
  2
  5
  7
  11
  16
  23
  31
  41
  53
  67
  84
  102
  123
  146
  172
  199
  229
  261
  295
  332
  370
  410
  452
  496
  542
  590
  640
  692
  746
  802

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  35
  56
  86
  129
  188
  265
  364
  488
  641
  825
  1,042
  1,294
  1,582
  1,907
  2,269
  2,668
  3,103
  3,575
  4,081
  4,622
  5,197
  5,804
  6,444
  7,115
  7,817
  8,551
  9,316
  10,113
  10,942
  11,804
  12,701
Adjusted assets (=assets-cash), $m
  35
  56
  86
  129
  188
  265
  364
  488
  641
  825
  1,042
  1,294
  1,582
  1,907
  2,269
  2,668
  3,103
  3,575
  4,081
  4,622
  5,197
  5,804
  6,444
  7,115
  7,817
  8,551
  9,316
  10,113
  10,942
  11,804
  12,701
Revenue / Adjusted assets
  0.143
  0.143
  0.140
  0.140
  0.144
  0.143
  0.143
  0.143
  0.144
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
  0.143
Average production assets, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Working capital, $m
  20
  4
  6
  9
  13
  19
  26
  35
  46
  59
  75
  93
  113
  136
  162
  191
  222
  256
  292
  330
  372
  415
  461
  509
  559
  611
  666
  723
  782
  844
  908
Total debt, $m
  12
  20
  31
  47
  69
  97
  134
  180
  237
  305
  386
  479
  586
  706
  841
  989
  1,150
  1,325
  1,513
  1,714
  1,927
  2,152
  2,390
  2,639
  2,899
  3,171
  3,455
  3,751
  4,059
  4,378
  4,711
Total liabilities, $m
  13
  21
  32
  48
  70
  98
  135
  181
  238
  306
  387
  480
  587
  707
  842
  990
  1,151
  1,326
  1,514
  1,715
  1,928
  2,153
  2,391
  2,640
  2,900
  3,172
  3,456
  3,752
  4,060
  4,379
  4,712
Total equity, $m
  22
  35
  54
  81
  118
  166
  229
  307
  403
  519
  655
  814
  995
  1,199
  1,427
  1,678
  1,952
  2,248
  2,567
  2,907
  3,269
  3,651
  4,053
  4,475
  4,917
  5,379
  5,860
  6,361
  6,883
  7,425
  7,989
Total liabilities and equity, $m
  35
  56
  86
  129
  188
  264
  364
  488
  641
  825
  1,042
  1,294
  1,582
  1,906
  2,269
  2,668
  3,103
  3,574
  4,081
  4,622
  5,197
  5,804
  6,444
  7,115
  7,817
  8,551
  9,316
  10,113
  10,943
  11,804
  12,701
Debt-to-equity ratio
  0.545
  0.560
  0.570
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629
  0.629

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3
  2
  5
  7
  11
  16
  23
  31
  41
  53
  67
  84
  102
  123
  146
  172
  199
  229
  261
  295
  332
  370
  410
  452
  496
  542
  590
  640
  692
  746
  802
Depreciation, amort., depletion, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  3
  2
  5
  7
  11
  16
  23
  31
  41
  53
  67
  84
  102
  123
  146
  172
  199
  229
  261
  295
  332
  370
  410
  452
  496
  542
  590
  640
  692
  746
  802
Change in working capital, $m
  0
  2
  2
  3
  4
  6
  7
  9
  11
  13
  16
  18
  21
  23
  26
  29
  31
  34
  36
  39
  41
  43
  46
  48
  50
  52
  55
  57
  59
  62
  64
Cash from operations, $m
  3
  1
  2
  4
  7
  11
  16
  22
  30
  40
  52
  66
  82
  100
  120
  143
  168
  195
  225
  257
  290
  326
  364
  404
  446
  490
  535
  583
  633
  684
  738
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
New CAPEX, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from investing activities, $m
  -4
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Free cash flow, $m
  -1
  1
  2
  4
  7
  11
  16
  22
  30
  40
  52
  66
  82
  100
  120
  143
  168
  195
  225
  257
  290
  326
  364
  404
  446
  490
  535
  583
  633
  684
  738
Issuance/(repayment) of debt, $m
  -6
  8
  11
  16
  22
  29
  37
  46
  57
  68
  81
  93
  107
  121
  134
  148
  162
  175
  188
  201
  213
  225
  237
  249
  261
  272
  284
  296
  308
  320
  332
Issuance/(repurchase) of shares, $m
  0
  11
  15
  20
  25
  32
  39
  47
  55
  62
  69
  75
  79
  81
  82
  79
  75
  67
  57
  45
  30
  12
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4
  19
  26
  36
  47
  61
  76
  93
  112
  130
  150
  168
  186
  202
  216
  227
  237
  242
  245
  246
  243
  237
  237
  249
  261
  272
  284
  296
  308
  320
  332
Total cash flow (excl. dividends), $m
  3
  19
  28
  40
  54
  72
  92
  116
  142
  171
  202
  234
  267
  302
  336
  370
  404
  438
  470
  502
  533
  564
  601
  653
  707
  762
  819
  879
  940
  1,004
  1,070
Retained Cash Flow (-), $m
  -4
  -13
  -19
  -27
  -37
  -48
  -62
  -78
  -96
  -116
  -137
  -158
  -181
  -204
  -228
  -251
  -274
  -297
  -319
  -340
  -361
  -382
  -402
  -422
  -442
  -462
  -481
  -501
  -522
  -542
  -564
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6
  9
  13
  17
  23
  30
  37
  46
  55
  65
  75
  86
  97
  108
  119
  130
  141
  152
  162
  172
  182
  199
  231
  265
  300
  338
  377
  419
  462
  507
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  6
  8
  10
  13
  16
  18
  21
  23
  24
  25
  25
  24
  23
  21
  19
  17
  15
  12
  10
  8
  6
  5
  4
  3
  3
  2
  1
  1
  1
  0
Current shareholders' claim on cash, %
  100
  82.2
  69.4
  59.9
  52.6
  47.0
  42.5
  39.0
  36.1
  33.8
  31.9
  30.4
  29.1
  28.1
  27.3
  26.6
  26.1
  25.7
  25.4
  25.2
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1
  25.1

Manhattan Bridge Capital, Inc. (MBC) is a real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. The Company offers short-term, secured, non-banking loans to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area. Its primary business objective is to grow its loan portfolio while protecting and preserving capital in a manner that provides for risk-adjusted returns to its shareholders over the long term through dividends. It intends to achieve this objective by continuing to selectively originate, fund loans secured by first mortgages on residential real estate held for investment located in the New York metropolitan area, and to manage and service its portfolio in a manner designed to generate risk-adjusted returns across a range of market conditions and economic cycles. Its loan portfolio includes various construction loans.

FINANCIAL RATIOS  of  Manhattan Bridge Capital (LOAN)

Valuation Ratios
P/E Ratio 16.6
Price to Sales 10
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 16.6
Price to Free Cash Flow 16.6
Growth Rates
Sales Growth Rate 25%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 27.3%
Total Debt to Equity 54.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 11.9%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 9.2%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 15%
Return On Equity - 3 Yr. Avg. 12.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 80%
EBITDA Margin - 3 Yr. Avg. 73.9%
Operating Margin 60%
Oper. Margin - 3 Yr. Avg. 58.9%
Pre-Tax Margin 60%
Pre-Tax Margin - 3 Yr. Avg. 47.8%
Net Profit Margin 60%
Net Profit Margin - 3 Yr. Avg. 47.8%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 100%

LOAN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LOAN stock intrinsic value calculation we used $5 million for the last fiscal year's total revenue generated by Manhattan Bridge Capital. The default revenue input number comes from 2016 income statement of Manhattan Bridge Capital. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LOAN stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.5%, whose default value for LOAN is calculated based on our internal credit rating of Manhattan Bridge Capital, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Manhattan Bridge Capital.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LOAN stock the variable cost ratio is equal to 20%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for LOAN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 8% for Manhattan Bridge Capital.

Corporate tax rate of 27% is the nominal tax rate for Manhattan Bridge Capital. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LOAN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LOAN are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Manhattan Bridge Capital operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LOAN is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $22 million for Manhattan Bridge Capital - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 8.11 million for Manhattan Bridge Capital is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Manhattan Bridge Capital at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Manhattan Bridge Capital, Inc. Declares Quarterly Dividend   [Aug-02-17 07:00AM  GlobeNewswire]
▶ Manhattan Bridge Capital, Inc. Reports Results for 2016   [Mar-15-17 07:15AM  GlobeNewswire]
▶ Manhattan Bridge Capital, Inc. Declares Quarterly Dividend   [Feb-14-17 07:00AM  GlobeNewswire]
▶ Undervalued Stocks With Positive Performances   [Feb-01-17 04:48PM  GuruFocus.com]
▶ Zacks SCR Initiates Coverage of IEG Holdings (IEGH)   [Jan-23-17 11:00AM  Zacks Small Cap Research]
▶ Manhattan Bridge Capital, Inc. Declares Quarterly Dividend   [Nov-01-16 07:00AM  GlobeNewswire]
▶ Manhattan Bridge Capital, Inc. Declares Quarterly Dividend   [May-02-16 04:09PM  GlobeNewswire]
▶ Manhattan Bridge Capital, Inc. Reports Results for 2015   [Mar-08-16 05:59PM  GlobeNewswire]
▶ Manhattan Bridge Capital, Inc. Declares Quarterly Dividend   [Feb-12-16 07:00AM  GlobeNewswire]
▶ 4 Super-Safe High-Dividend Stocks to Buy Now   [Aug-29  09:45AM  at TheStreet]
▶ 10-Q for Manhattan Bridge Capital, Inc.   [Aug-03  08:09PM  at Company Spotlight]
Financial statements of LOAN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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